Winning war on poverty demands shifting focus to fighting unemployment

In 1964, then-President Lyndon B. Johnson declared war. Not a foreign war to be waged against another country fought with soldiers, tanks and bombs, but a war to be waged at home.

The enemy: poverty. The weapons: initiatives intent on improving education, health, skills, jobs and access to economic resources for those stuck in poverty. The combatants: Congress and all Americans versus the nebulous concept of poverty. The victor: undetermined.

In his first State of the Union address, the new president declared “unconditional war on poverty in America.” That was over 50 years ago, and this war is not over.

The strongest soldier in this fight has been the U.S. economy. But in order to combat poverty, there was an increase in government programs. For example, the Supplemental Nutrition Assistance Program (SNAP), formerly known as the Food Stamp Program, was made permanent by Johnson in 1964. Social Security benefits were also increased. With the start of Medicare and Medicaid in 1965, as well as the Affordable Care Act in 2010, medical assistance has also been increased greatly. These are just a few of the safety nets implemented by government to help Americans who are struggling to make ends meet.

And perhaps some of these programs have paid off. After all, new figures used by the Census Bureau’s Supplemental Poverty Measure (SPM) show that poverty in America has declined from 25 percent in 1967 to 16 percent in 2012. That’s a victory of sorts.

But this 9 percent victory came at a great cost.

A 2014 study by the Heritage Foundation found that, since 1964, “U.S. taxpayers have spent over $22 trillion on anti-poverty programs. Adjusted for inflation, this spending (which does not include Social Security or Medicare) is three times the cost of all U.S. military wars since the American Revolution.” Furthermore, the amount spent on welfare and anti-poverty is 16 times more than it was in 1964.

In 2014, $851 billion (24 percent of the federal budget) paid for just Social Security. Another $856 billion (24 percent) went to Medicare, Medicaid, Children’s Health Insurance Program and the Affordable Care Act marketplace subsidies. An additional $370 billion (11 percent) is used for other “safety net” programs, according to figures from the Office of Management and Budget. All together, the national government spends around $2,077 billion on assistance programs. Only 2 percent of the national budget was used for education.

But is the current government-assistance strategy the most effective? Let’s get to know our enemy.

Poverty — a generally accepted definition is the state of being very poor or the condition when one’s basic needs (food, clothing, shelter) are not met.

There can be many factors that cause poverty, but according to a piece titled “The War on Poverty: Measurement, Trends, and Policy,” published in the summer 2015 issue of Journal of Policy Analysis and Management, one of the strongest predictors of poverty is unemployment, which is not surprising. If unemployment can lead to poverty, then employing individuals through business could help the problem.

Maybe it’s time for a new reliance on a strategy that has worked for a long time.

New target: unemployment. Re-engagement of an old combatant: business.

In fact, Johnson’s initial war declaration was not on just poverty — it was “all-out war on human poverty and unemployment.” But that “unemployment” part fell from the focus.

To beat unemployment, our main weapons should be education and economics. Statistically, individuals with higher education are less likely to be in poverty — perhaps because they have the knowledge and skills to be hired for higher paying jobs. The more business-friendly the economy, the more opportunity there is for individuals to be hired — it is a simple supply and demand situation.

Since war was declared in 1964, the focus has been on reducing poverty through government-assistance programs. As a result, some battles may have been won, but others have been lost. Statistics show both sides.

Fifty years later perhaps it’s time for a change in tactics. Perhaps our resources should go towards the second part of the declaration: unemployment. Perhaps we can have great victory and maybe even win the war if we focus on business.

John Hoffmire is director of the Impact Bond Fund at Saïd Business School at Oxford University and directs the Center on Business and Poverty at the Wisconsin School of Business at UW-Madison. He runs Progress Through Business, a nonprofit group promoting economic development. Maren McInnes, Hoffmire’s colleague at Progress Through Business, did the research for this article.